Ithmaar Bank has announced negotiations on a proposed merger with First Leasing Bank, one of its Bahrain-based associates, have reached an advanced stage.

In a statement yesterday, Ithmaar Bank Chief Executive and board member Mohammed Bucheerei said directors of both entities had approved the merger and the Central Bank of Bahrain (CBB) had also given its initial approval.

The proposed merger will involve a share swap, said Mr. Bucheerei, and be presented to both sets of shareholders at extraordinary general meetings (EGMs), expected to be held towards the end of October.

If shareholders approve, the plan will be subject to final approval from the CBB as well as the Industry and Commerce Ministry.

"Since Ithmaar Bank's reorganisation in April 2010 with its then wholly-owned subsidiary, Shamil Bank, and its subsequent transformation from an investment bank into an Islamic retail bank, Ithmaar has focussed on developing its retail and commercial banking operations," said Mr. Bucheerei. "This is in line with the Ithmaar board-approved vision of becoming a premier Islamic retail bank," he said.

"In doing so, we allow for an exclusive focus on our retail banking operations. More importantly, this also creates a powerful synergy within the new, rationalised group structure," he said.

First Leasing Bank is an associate of Ithmaar Bank which holds 21.32 per cent, the single largest block of shares. The remaining 33 shareholders comprise leading individuals and companies.